BT residential customers lose despite competition

The vast majority of residential telephone customers have seen only a tiny fraction of the savings from competition and regulation compared with high spending households and business, the watchdog, Oftel, admitted yesterday.

Don Cruickshank, the telephones regulator, also revealed yesterday that British Telecom had put long-awaited forward plans to link up schools to the so-called information superhighway, though he dismissed any suggestion that the move was linked to the controversial "deal" with Labour to lift the ban on the group broadcasting entertainment down its phone network.

The figures from Oftel showed the four-year price regime, which finishes next month, gave almost all the savings to just the top 20 per cent of residential customers spending an average of pounds 130 a quarter on calls. "It shows how relatively little low-spending customers have benefited ... We're just being honest," Mr Cruickshank said.

While the top 20 per cent of households saw bills fall by 19.7 per cent in cash terms between 1991 and 1997, the rest of the 22 million homes, which spend an average of pounds 44 a quarter on calls, saw bills drop by just 1.1 per cent. The lowest spenders in the bottom 20 per cent of homes, spending around pounds 27 a quarter, saw the least benefit from price controls, with bills going up by more than 15 per cent because of rises in line rental charges. Some 2.5 million members of BT's light user discount scheme saw reductions averaging 20.5 per cent.

Though the four-year price regime cut overall bills by 7.5 per cent below inflation, it was focused mainly on businesses and high spending households. Average bills had dropped by 47 per cent in real terms since 1991. The new price regime, starting in August, excludes almost all business customers and should focus price cuts on lower spenders.

BT declined to give details of the group's offer to link schools with the superhighway, insisting the proposals were commercially confidential. They are similar to a scheme begun by the cable companies which provide free initial connections to high capacity information links and fixed annual fees of between pounds 100 and pounds 600.

The BT plan would connect most schools using ISDN digital technology with its existing infrastructure, rather than providing direct fibre-optic cable links. ISDN connections would allow several computers Internet access simultaneously.

Mr Cruickshank and BT disagreed yesterday about the origins of the initiative, with Oftel claiming it had started the project. "BT has to do this. It is not a matter of choice." But a BT spokeswoman said the schools connections were merely an expansion of its existing strategy.